Vangal seeks his share in Cambridge Solutions

MUMBAI: A battle has erupted between serial entrepreneur Ramesh Vangal and his former promoter colleagues in Scandent Solutions over a delay in the fulfilment of certain conditions in their agreement.

People close to the situation said Mr Vangal is angry that he has not been given his share in Cambridge Solutions — the Indian subsidiary of Scandent — as promised. Cambridge is a Bangalore-based IT services and BPO company. Mauritius-based Scandent owns 59.11% stake in the company.

Former PepsiCo chief Chris Sinclair, Canada's Bronfman family, the Geneva-based Chanderia family, former McKinsey chief Rajat Gupta and Ramesh Vangal started Scandent some years ago to focus on IT and BPO services.

Mr Vangal, who quit in January 2006, has asserted his rights over a portion of Scandent's equity in Cambridge. According to people close to the situation, this stake is directly derived from his equity in Scandent, the main holding company. A stake in Cambridge was part of an agreement when he left Scandent last year. The shares were supposed be transferred to him after a stipulated period.

Mr Vangal, however, denies any dispute. "There is no dispute as of now. I am not saying if there was a dispute in the past," he told ET. His spokesman said the distribution of shares has been taken care of, but declined to reveal details.

But sources said the dispute is real and has been simmering for some months now. It was triggered when Mr Vangal demanded his share of Cambridge.

The agreement states that Mr Vangal would be given his share of Cambridge derived from his holding in Scandent. Mr Vangal and Rajat Gupta are believed to hold around 30% together in Cambridge. Mr Vangal's individual holding in the company could not be ascertained.

But Scandent found it difficult to fulfil this demand as its entire holding in Cambridge was pledged with Merrill Lynch. The stake could not be freed without paying off the loan.

So, the firm decided to sell its entire shareholding and Lehman Brothers was appointed to find a buyer. After many months of trying, the process came to an abrupt halt as some key bidders like HCL Technologies and US buyout giant Carlyle pulled out. Carlyle was in partnership with Mr Vangal.

The collapse of the process was bad news for both Scandent and Mr Vangal.

Scandent and Lehman Brothers will now have to start all over again to entice suitors, who are likely to be finicky this time around. Cambridge shares fell to their 52-week low of Rs 102 on August 17, though they have recovered about 9.59% since then.

Mr Vangal, it is believed, is trying to put together a new partner in order to bid again for Cambridge. He may have a better chance this time around, but new bidders may demur, given Mr Vangal's right over a chunk of Cambridge's equity.

It is believed that some of Scandent's other shareholders are trying to resolve this dispute amicably. One of the options is to buy out Mr Vangal in Scandent at a certain price. But details of this transaction could not be obtained.